Gayatri Projects Ltd. (GAYAPROJ) - Director Report

Company director report

The Directors have pleasure in presenting before you the Directors Report of theCompany together with the Audited Statements of Accounts for the year ended 31stMarch 2017.

FINANCIAL RESULTS (Standalone) :

Rs in Lakhs

Particulars

2016-17

2015-16

Revenue from Operations

211535.05

181221.25

Other Income

3058.34

699.69

Total Income

214593.39

181920.94

Profit Before Interest depreciation Exceptional Items and Taxes

35400.05

26733.53

Less: Financial Cost

20138.18

16017.56

Profit before Deprecation Exceptional Items and Taxes

15261.87

10715.97

Less: Depreciation and Amortisation Expenses

4315.54

3747.47

Profit before Exceptional Items and Taxes

10946.33

6968.50

Less: Exceptional Items (Net)

(1538.65)

-

Profit Before Tax

9407.68

6968.50

Provision for Tax

2365.16

1167.04

Profit After Tax

7042.52

5801.46

Other Comprehensive income/(losses) for the Year

17.11

(59.59)

Total comprehensive income for the year

7059.63

5741.87

Paid up Capital

3545.04

3545.04

Review of Operations :

Net revenue from operations on standalone basis increased to Rs. 21 1535.05 Laks asagainst Rs. 181221.25 Laks in the previous year - a growth of 16.73%. The Profit after Taxfor the current year is Rs. 7178.86 Laks as against Rs. 5801.46 Laks in the previous year- a growth of 23.74%. The growth in profit is mainly driven by increase in net revenuefrom operations and softening of input prices during the year.

A few key policy changes including long awaited GST Act was finally approved paving theway for its implementation in the current financial year. Consumer spending got a hugeshock when Government demonetised two highest denominated currency bills. However as theyear progressed demand recovered and achieved normalcy by 4th quarter. Thanks to thesustained lower crude prices and good monsoon inflation also remained in check.

The company order book has improved substantially during the year under review andstands at Rs. 12474.2 1 crores as at 31st March 2017 consisting of road works Rs.7094.35crores irrigation works Rs.3548.12 crores and other works Rs 1831.74 crores.

There are no material changes and commitments affecting the financial position of yourCompany which have occurred between the end of the financial year 2016-17 and the date ofthis report.

Future Outlook:

The Government of India is taking every possible initiative to boost the infrastructuresector. Recently government has approved the biggest ever highway construction plan todevelop nearly 83667 km of roads by 2022 at an investment of Rs 6.92 laks crores. Theprogram includes government's Bharatmala scheme under which 34800 km of highways would beconstructed at the cost of Rs3.35 lakh crores. Infrastructure sector is a key driver forthe Indian economy. The sector is highly responsible for propelling India's overalldevelopment and enjoys intense focus from Government.

Your Company has been able to built-up good order book and committed to continues towork towards improving the order book going forward. The present order book and theopportunities in the Indian infrastructure sector provides good visibility towards asustainable and profitable growth going forward. Your company is steadfast in adoptingmodern technologies for better execution and improving the margins going forward.

Dividend:

As per the conditions stipulated by the lenders in the Master Restructuring Agreementwhich is in force approval of the lender is required for declaration of dividend to theshareholders. The lenders of the Company have not accorded their approval for dividenddeclared by the Board of Directors for the financial year 2016-17. Hence the recommendeddividend for the financial year ended March 3 1 2017 is herewith stands cancelled.

Share Capital:

The face value of the equity share of the company was subdivided from Rs. 10/- pershare to Rs.2/- per share w.e.f 10.02.2017 (Record date 13.02.2017).

Material Changes and Commitments affecting the Financial Position of the Company:

There are no material changes and commitments affecting Financial position of thecompany between the end of the financial year to which these statements relate and thedate of this Board's Report except that the Company has acquired 100% shareholding of M/s.Gayatri Infra Ventures Limited in accordance with the Composite Scheme of ArrangementPursuant to the aforesaid acquisition M/s. Gayatri Infra Ventures Limited has becomewholly owned subsidiary of the company.

There is no change in the nature of business of the Company during the year underreview.

Composite Scheme of Arrangement:

With regard Composite Scheme of Arrangement between M/s. Gayatri Projects Limited M/s.Gayatri Infra Ventures Limited M/s. Gayatri Domicile Private Limited and their respectiveShareholders the Company has filed with BSE Limited and National Stock Exchange of IndiaLimited the Composite Scheme of Arrangement between Gayatri Projects Limited GayatriInfra Ventures Limited and Gayatri Domicile Private Limited and their respectiveshareholders (as approved by the Board of Directors on 16.07.2016) along with otherdocuments on 05th day of August 2016 pursuant to Regulation 37 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

The Company has received Observation Letter or Noobjection letter from the stockexchanges. Further the Company has filed the Composite Scheme of Arrangement with Hon'bleHigh Court of Judicature at Hyderabad and the same has been admitted.

Pursuant to the order of the Hon'ble High Court of Andhra Pradesh and Telangana themeetings of Equity Shareholders Secured and Unsecured Creditors of the Company convenedand held on Monday 23rd January 2017 at the FTAPCCI Auditorium Federation ofTelangana and Andhra Pradesh Chambers of Commerce and Industry Federation House 1 1-6-841 Red Hills Hyderabad 500004 for the purpose of considering the scheme and the samehas been approved by them with requisite majority.

The Ministry of Corporate Affairs has notified Section 230 [except subsections (11) and(12)] sections 23 1232 and 239 of the Companies Act 2013 on 15.12.2016 pursuant to theaforesaid notification The National Company Law Tribunal (NCLT) has acquired jurisdictionover the matters dealt with amalgamation compromise and arrangement.

The National Company Law Tribunal (NCLT) Hyderabad Bench vide its order dated 3rdNovember 2017 has sanctioned the Composite scheme of arrangement (Scheme') underSection 232 read with Section 230 of the Companies Act 2013 between Gayatri ProjectsLimited (Transferee Company / GPL) Gayatri Infra Ventures Limited (Transferor Company /GIVL) and Gayatri Domicile Private Limited (Resulting Company / GDPL). The Scheme iseffective from 23rd November 2017 i.e. the date of filing of the certified copy of theorder of the NCLT with the Registrar of Companies Telangana State.

As a result of the said amalgamation your Company now can focus on the core businessof Engineering Procurement Contracts (EPC) and can augment its operations coupled withmore financial leverage.

Board Meetings:

The Board of Directors met 9 times in the Financial Year 2016-17 on 14thApril 2016 14th May 2016 30th May 2016 16th July 201626th August 2016 22nd November 2016 09th December 201626th December 2016 14th February 2017.

Directors and Key Managerial Personnel:

During the year under review there is no change in the Directors and Key ManagerialPersonnel of the Company.

The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence laid down in Section 149(6).

Composition of Audit Committee:

The Audit Committee of the Board of Directors is as follows:

Mr. Ch. Hari Vittal Rao

- Chairman

Dr. V. L. Moorthy

- Member

Mr. G Siva Kumar Reddy

- Member

Mr. J.N. Karamchetti

- Member

Policy Laid Down by the Nomination and Remuneration Committee for Remuneration ofDirectors KMP & Other Employees:

The Remuneration policy of the Company is performance driven and is structured tomotivate Employees. Recognize their merits and achievements and promote excellence intheir performance. The Nomination Remuneration and Evaluation Policy of the company isenclosed at Annexure- I of this report.

Manner in Which Formal Annual Evaluation has been made by the Board of its OwnPerformance and that of its Committees and Individual Directors:

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out evaluation of (i) itsown performance (ii) the directors individually and (iii) working of its Committees. Themanner in which the evaluation was carried out as detailed below:

(a) Nomination & Remuneration Committee:

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Nomination and Remuneration Committee hasformulated the criteria for evaluation of directors and evaluated every director. Astructured questionnaire was prepared after taking into consideration various parameterssuch as attendance and participation in meetings monitoring corporate governancepractices independence of judgment safeguarding the interests of the company etc. andaccordingly the evaluation was made. The Members of the Committee evaluated the individualdirectors at its meeting held on 14.02.2017.

The Nomination and Remuneration Committee decided that since the performance of thedirectors has been excellent it is decided to continue with the term of the directorsthe Managing Director and the Executive Director.

(b) Separate Meeting of Independent Directors:

The Independent directors of the Company at its meeting held on 14.02.2017 (a) reviewedthe performance of the non-independent directors and

Board (b) reviewed the performance of the Chairperson of the Company and (c) assessedthe quality quantity and timeliness of flow of information between the company managementand the Board. All the Independent Directors attended the meeting.

A structured questionnaire was prepared after taking into consideration variousparameters such as attendance and participation in meetings monitoring corporategovernance practices independence of judgment safeguarding the interests of the companyetc. and accordingly the evaluation was made. The independent directors evaluated thenonIndependent directors.

The Independent Directors decided that since the performance of the Non-IndependentDirectors (including Managing Director and Whole time Director) is excellent the term oftheir appointment be continued.

The Independent Directors after review of the performance of the Chairman decided thatthe Chairman has good experience knowledge and understanding of the Board's functioningand her performance is excellent. The Independent Directors decided that the informationflow between the Company's Management and the Board is excellent.

(c) Evaluation by Board: The Board has carried out the annual performance evaluation ofits own performance the Directors individually (excluding the director being evaluated)as well as the evaluation of the working of its Committees. A structured questionnaire wasprepared after taking into consideration various aspects of the Board's functioning suchas adequacy of the composition of the Board and its Committees effectiveness indeveloping Corporate governance structure to fulfil its responsibilities execution andperformance of specific duties etc. The Board decided that the performance of individualdirectors its own performance and working of the committees is excellent.

Director's Responsibility Statement:

In pursuance of section 134 (5) of the Companies Act

2013 the Directors hereby confirm that:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively

Subsidiaries Companies Associates and Joint Ventures:

The Company has two subsidiary companies (including step down subsidiaries) as on 31stMarch 2017 as per the Companies Act 2013.

As per the provisions of Section 129 of the Companies Act 2013 read with Companies(Accounts) Rules 2014 a separate statement containing the salient features of thefinancial statements of the subsidiary Companies/ Associate Companies/Joint Ventures isprepared in Form AOC-1 are given in Annexure- II.

The Company will make available the Annual Accounts of the subsidiary companies and therelated information to any member of the Company who may be interested in obtaining thesame. The annual accounts of the subsidiary companies will also be kept open forinspection by any member at the Registered Office of the Company and that of therespective subsidiary companies.

The company has adopted the policy for determining material' subsidiaries and thesame has been placed on the website of the company at http://www.gayatri.co.in/Investors/Corporate Governance/Policies.

Extract of Annual Return:

As required pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in MGT9 as a part of this Annual Report is Annexed as Annexure-MI.

Consolidated Financial Statements:

In compliance with Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and in compliance with the provisions of Section 129(3)and other applicable provisions of the Companies Act 2013 and Ind AS-1 10 and otherapplicable Accounting Standards your Directors have pleasure in attaching theconsolidated financial statements for the financial year ended March 31 2017 which formspart of the Annual Report.

Statutory Auditors and Their Report:

The Auditors M/s. M O S & Associates LLP Chartered Accountants Hyderabad retireat the ensuing Annual General Meeting and being eligible; offer themselves forreappointment for a period of one year from the conclusion of this Annual General Meeting[AGM] till the conclusion of next AGM. Your Board of Directors have recommended theirreappointment based on the recommendation of the Audit Committee to the members for theirapproval at the forthcoming Annual general meeting for a term of one year till theconclusion of the next AGM.

Secretarial Audit:

As per the provisions of the Section 204(1) of the Companies Act 2013 the Company hasappointed Mr. Y. Koteswara Rao Practising Company Secretary to conduct Secretarial Auditof the records and documents of the Company The Secretarial Audit Report for the FinancialYear ended 3 1st March 2017 in Form No MR-3 is annexed to the Directors Reportas Annexure - IV and forms part of this Report. The Secretarial Auditors' Report to theMembers of the Company for the Financial Year ended March 31 2017 does not contain anyqualification(s) or adverse observations

Disclosures:

a) Deposits

Company has not accepted any deposits covered under Chapter V of the Companies Act2013

b) Conservation of energy

The Company's main line of activity is civil construction which is not power intensive.However the Company is taking all efforts to conserve the usage of power.

(i) Use of alternate sources of energy is not applicable to the Company.

(ii) Capital investment on energy conservation equipment for its main line of activityis not applicable to the Company.

c) R & D Technology absorption

The Company main line of activity is civil construction and hence R &D andtechnology absorption is not applicable to the Company.

d) Foreign Exchange Earnings - NIL

e) Foreign Exchange Outgo

Nature of Payment

Amount in ' Lakhs

Foreign Travel

12.70

Repayment of ECB Loan

1771.45

Repayment of ECB Interest

782.14

Consultancy & Technical Fees

1584.38

Purchase of Plant & Machinery

3173.34

Purchase of Equity

3341.92

Details of Adequacy of Internal Financial Controls:

The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies andinternal financial controls laid down by the Company.

Particulars of Loans Guarantees or Investments:

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements. Alsopursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the particulars of Loans/Advances given to Subsidiaries have beendisclosed in the notes to the Financial Statements.

Management Discussion & Analysis:

Management Discussion and Analysis Report is annexed which forms part of this Report asAnnexure -V.

Risk Management Policy:

The Company has been addressing various risks impacting the Company and developed riskpolicy and procedures to inform Board members about the risk assessment and minimizationprocedures.

Whistle Blower Policy/Vigil Mechanism:

Pursuant to Section 177 of the Companies Act 2013 and the Rules framed there under andpursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theCompany has established a mechanism through which all the stakeholders can report thesuspected frauds and genuine grievances to the appropriate authority. The Whistle BlowerPolicy which has been approved by the Board of Directors of the Company has been hosted onthe website of the Company at http://www.gayatri.co.in/ Investors/CorporateGovernance/Policies.

Disclosure as per Section 22 of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013:

Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013 read with Rules thereunder theCompany has not received any complaint of sexual harassment during the year under review.

Corporate Social Responsibility Policy:

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year are setout in Annexure-VI of this report in the format prescribed in the Companies (CorporateSocial Responsibility Policy) Rules 2014. The policy is available on the website of theCompany at http://www.gayatri.co.in/Investors/Corporate Governance/Policies.

Significant & Material Orders Passed by the Regulators:

There are no significant and material orders passed against the Company by theregulators impacting the Company's operation in the future.

Contracts or Arrangements with Related Parties:

All related party transactions that were entered during the financial year were in theordinary course of the business of the Company and were on arm's length basis. There wereno materially significant related party transactions entered by the Company during theyear with Promoters Directors Key Managerial Personnel or other persons which may have apotential conflict with the interest of the Company.

The policy on dealing with Related Party Transactions is disseminated on the website ofthe company at http:// www.gayatri.co.in/Investors/ Corporate Governance/ Policies.

Fixed Deposit:

Your Company has not accepted or renewed any deposit from public during the year underreview.

Cost Audit:

M/s. N.S.V. KRISHNA RAO & Co. Cost Auditors were appointed as cost auditor to auditthe cost records of the Company for the F.Y 2016-17 and re-appointed for the FinancialYear 2017-18.

Particulars of Employees:

Details in respect of remuneration paid to employees as required under Section 197 (12)of the Companies Act 2013 read with Rule 5(2) & (3) of the Companies (Appointmentand Remuneration of Managerial Personnel)

Rules 2014 as amended forms part of this report. In terms of Section 136 of theCompanies Act 2013 the same is open for inspection at the Registered Office of theCompany. Copies of this statement may be obtained by the members by writing to the CompanySecretary at the Registered Office of the Company.

The ratio of the remuneration of each Director to the median employee's remunerationand other details in terms of Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are enclosed in Annexure - VII and forms part of this Report.

Listing with Stock Exchanges:

The Company confirms that it has paid the Annual Listing Fees for the year 2017-2018 toNSE and BSE where the Company's Shares are listed.

Corporate Governance and Shareholders Information:

Your Company has taken adequate steps to adhere to all the stipulations laid down inRegulation 34 read with Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. A report on Corporate Governance is included as a part ofthis Annual Report as

Annexure -VIII. Certificate from the practicing Company Secretary confirming thecompliance with the conditions of Corporate Governance as stipulated under aforesaidregulations is attached to this report.

Business Responsibility Report

As per Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a Business Responsibility Report covering the principle wiseperformance of the Company on the nine principles as per National Voluntary Guidelines(NVGs) forms a part of the Annual report of the Company as Annexure -IX.

Acknowledgement:

Your Directors would like to acknowledge and place on record their sincere appreciationto all stakeholders - clients financial institutions Banks Central and StateGovernments the Companies' valued investors and all other business partners for theircontinued co-operation and excellent support received during the year.

Yours Directors recognize and appreciate the efforts and hard work of all the employeesof the Company and their continued contribution to its progress.